Top 7 Tips to Save Money on Workers' Compensation Insurance
Updated: Feb 8, 2022
In the United States, all employers are required by law to carry workers’ compensation insurance, so it might benefit you to learn how to save money on your workers’ compensation premiums. Many employers are not conversant with this. So if it sounds new or confusing to you, workers’ compensation helps employers like you to provide assistance to employees who have been injured or became ill in the workplace. The coverage for this insurance can include medical expenses, ongoing care, lost wages, and funeral expenses.
Workers’ compensation is designed to assist both the employer and the injured employee. In California and most states, the amount you pay for workers’ insurance is determined by the level of risk your employees are exposed to, the state where you do business, and the industry. To learn more about worker’s compensation, be sure to check out our post on the topic. If your business deals in high-risk fields, such as trucking, construction, electrical contracting, staffing or talent outsourcing, nursing homes, etc., here are the top 7 tips to help you save money on workers compensation insurance:
1. Classify Employees Correctly
When calculating the workers’ compensation premium for each worker, it is important that all employees working for you are classified correctly. Generally, workers’ classification is based on the risk exposure of the worker. To clarify, an employee in charge of accounting, paperwork, or administrative functions encounters far fewer risks than another who works at a construction site where a lot of heavy lifting is done.
The premium you will pay for the second worker will be higher than that for the first. This is because of less exposure to workplace hazards. Therefore the worker is classified in a ‘cheaper’ category. This means that if your company has plenty of workers with a high-risk classification, you will likely pay higher premiums. The National Council on Compensation Insurance (NCCI) is the standard for classification codes. Private workers' compensation insurance providers use the NCCI codes to determine the premium payment for each employee. Note that the classification codes for state-run plans vary.
2. Document Your Workplace Safety Program
If you do not have a workplace safety program written for your employees, now is an excellent time to start. Making this a priority will save a lot of pain. How? Having a safety program for your workplace means fewer workers will get injured. In other words, the cost of workers’ compensation is less. Besides, considering the position of the law, it is only in a businesses’ best interest to have a workplace safety program.
Federal and state laws make it clear that employers are responsible for providing a safe and healthy workplace for employees. Employees, as a matter of fact, have a right to work in a safe environment, meaning that they can demand it. Specifically, federal and state laws addressing the matter maintain that:
Employers must have a written safety program that addresses hazard exposure for their workforce
Employers must train workers on safety regarding work-specific hazards
It is the responsibility of employers to identify and address workplace hazards and model correct workplace safety behaviors
Your kind of business notwithstanding, it is essential to have a written safety program and standard operating procedures (SOPs) for handling hazards, and employees must know about these rules.
3. Train Your Workers
No matter the nature of your business, it is still a mandatory requirement for employers to provide safety training for their workforce. Understandably, this may seem like a waste, but when you consider the benefits, in the long run, you’ll see why it makes sense to train your workers on correct workplace safety measures. As mentioned above, the law holds employers responsible for workplace safety training and practice.
Important safety topics to train workers on include common workplace hazards like emergency response and rescue, hazard communication, how to use fire extinguishers, respiratory protection, etc. Those exposed the most are new workers, so you want to pay attention to them and make sure they are brought up to speed as quickly as possible. In addition to professional outsourced workplace safety training, you can incorporate monthly or quarterly safety awareness campaigns within the company and use OSHA training resources to strengthen occupational safety protocols.
4. Hire for Safety and Test for Drugs
During interviews and before onboarding, HR may not be able to obtain workers’ compensation claim history or even ask as it is prohibited by law. However, you can ask the candidate to share their view on workplace safety. This way, you get information about the safety attitude of potential new hires and also test their knowledge on using safety equipment. You can tailor your recruitment process to focus on identifying employees who share safety as an organizational value.
To eliminate potential safety risks, HR can ask potential employees during the hiring process to submit a pre-employment drug test report. This is actually a mandatory procedure in many companies and is often triggered by an unexpected workplace accident. In some high-risk industries, such as trucking, utilities, construction, etc., random drug screening is often used to prevent workplace accidents. Having a drug testing policy can help employers keep their workforce safe.
5. Develop a Workplace Injury Response Protocol
In the event that a worker gets injured, it is important to have a clear protocol for an immediate response, starting from the provision of on-site first aid treatment, CPR, and Automated External Defibrillators to providing professional medical care, awarding compensation claims, and returning to work. This not only saves you money, but it also helps you avoid running around, confused. This must be comprehensive and detailed enough to show that the company cares for its employees.
Again, how easy is it to access immediate medical care when an employee gets injured? If the employee has to go through too many processes or suffer much pain before getting professional medical attention and it is the company's fault, this could lead to litigation and, consequently, higher compensation costs. Besides, proper care ensures that the injured employee returns to work sooner, saving the company loss of person-hours and reduced productivity.
6. Provide Competitive Health Insurance Plans and Work With the Right Medical Provider
Having robust health insurance and worker wellness programs in place is the way to go! You will be paying lesser premiums and compensation if a worker gets injured. Good health insurance plans allow your workers to access quality medical care to continue putting in their best work every day. Aside from common ailments like cold, back pain, and general fatigue, a health insurance plan is highly recommended for high-risk industries like construction, electrical contracting, manufacturing, etc.
Also, think of workplace health incentive programs, as they can help to improve the health of your workers. Offers like free gym memberships can help workers overcome challenges like weight loss, stress, depression and improve their fitness. But most importantly, you need to partner with a trusted and capable health care provider to be able to offer quality health insurance plans and wellness programs to your staff.
For high-risk businesses, workers expect to be taken care of when they are injured. Consider shopping around for the best providers at a very friendly price point. To help you make a better decision, you may collect and measure data on claim resolution per medical provider. If possible, it is okay to shop around to find the best medical care for your injured worker. Work with the insurance claims manager as you relate with medical providers.
7. Partner with a Professional Employer Organization
At the end of the day, one of the easiest — and perhaps the best — ways to save money on workers’ compensation is by partnering with a local professional employer organization. This includes getting access to the best health insurance plans, employee benefits packages, ensuring compliance with state and federal labor and employment laws, managing HR and other administrative functions, and so on.
But the most exciting part about working with a PEO is that you'll be getting all these services at a fraction of the price. If you work in a highly competitive industry and are struggling to afford good employee benefits and health insurance plans, consider working with any of these top 10 PEOs. Having a strong PEO service provider to rely on can make life so much easier for your company.
How Do I Find a Reliable PEO Service Provider?
When looking to partner with a PEO, ensure that the company is a certified professional employer organization (CPEO). The National Association of Professional Employer Organizations (NAPEO) is another accreditation organization that you can check with. Unlike regular PEOs, working with a certified PEO shields you from errors and liabilities that may arise due to the negligence or mistakes of the PEO. In addition to helping you cut down on workers' compensation premiums, a PEO enables you to access a fuller range of workers' benefits.
At Mission HR, we do not only offer businesses the services and solutions they need to scale their business quickly and efficiently, but we also bring our years of experience and rich insight to the table, providing your business with answers to all your bugging HR and outsourcing needs. Don't hesitate to contact us if you have further questions about PEO or hiring employees in other locations.